Offshore bank accounts and exchange of information.

Just this week I have been asked the same question in 2 separate meetings and thought it would make a good blog post.

The question:  Do offshore banks report information to the EU automatically now? 

The answer:  Not all, but most.  And the rest are quickly moving towards a full disclosure arrangement. 

I will mention the usual suspects here, but the Isle of Man and Guernsey now have a full reporting mechanism in place if you are the holder of an offshore bank account and living in the EU.  The bank will pay you gross interest on your savings and you would be expected to report that to the Italian tax authorities each year.  The onus is on you to report the information because the Italian tax authorities will be receiving not only the gross interest payment information that you are receiving, but also your name and address in Italy.  So failure to report this information could mean significant penalties, if you are (or when) discovered. 

Jersey, has decided to continue to allow the option to exchange of information OR apply a withholding tax on interest (a rate of 35% tax).  So you may choose to remain anonymous but you will pay an extraordinarily high rate of tax on interest for the right to remain unseen.  However, Jersey have already stated that they are looking at moving to a full exchange of information agreement and it could be as soon as next year. 

Switzerland is a different kettle of fish and is moving slowly towards a more comprehensive exchange of information agreement with the likes of the UK, Germany and the USA.  It is only a matter of time before Italy, France Spain and the rest of the EU follow suit.  Switzerland is too geographically and fiscally tied to the rest of the EU to not sit up and take notice.

The world of private and confidential banking is practically over in Europe.  As I have been 'preaching' for some time, ' in regola' is best and it does not cost a fortune in tax liabilities if some careful financial planning steps are taken.

The Spectrum IFA group are an International Financial Planning Group specialising in tax and investment matters for Expats based in (or have connections with)Western Europe.  If you would like to know more you can contact me on gareth.horsfall@spectrum-ifa.com or on +39 3336492356.